IMPACT OF DEPOSIT MOBILIZATION ON THE PROFITABILITY

OF SIDDHARTHA BANK LIMITED

A Project Work Proposal

By:
Amisha Pokharel
Symbol No:
Reg No: 7-2-242-430-2021
(Finance Group)
Makawanpur Multiple Campus

Submitted To:
The Faculty of Management
Tribhuvan University
Kathmandu

In partial fulfillment of the requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (B.B.S)
Hetauda, Makawanpur
Dec, 2025
1.1 Background of The Study

Financial institutions are the organizations that deal in acquisition and management of
funds helping to keep balance between surplus and deficit unit in an economy. A bank
is one of the major financial institutions and the economic engine of an economy that
deals with the financial transactions such as accepting deposits, granting credits,
clearing check, providing different financial advices etc. acting as an intermediary in
mobilizing the idle and scattered money in the productive way promoting the
economic health. Banking system is the backbone of financial intermediation through
the mobilization and channeling of financial resources (Bello, 2005). Joseph
Schumpeter (1911) believed that there were closed relationship between financial
institution and economic development. According to him, the banks were needed for
the technological innovation. The technological innovation is one of the most
important factors of economic development. Banking institutions play a pivotal role in
mobilizing the resources for enhancing the socio-economic welfare of the society.
Nepalese financial system is composed of deposit taking and contractual saving
institutions. The depository financial institutions include commercial banks,
development banks, micro-credit development banks, finance companies, financial
cooperatives, non-government organizations (financial) performing limited banking
activities. Likewise, other contractual saving organizations (popularly known as other
financial institutions) comprise insurance companies, employee's provident fund,
citizen investment trust, postal saving offices and Nepal stock exchange (Nepal Rastra
Bank, 2005).

Commercial bank is a profit-oriented financial service institution, certain of interest is

given to the deposits and a certain rate of interest is charged by the bank in loan
facility, the second charge interest rate is higher than the first and it is the main
earning of the bank (Subramnayam & Venkateswarlu , 2012). Deposits are the major
source of finance for banks. It is the cost effective source of working fund and is like
lifeblood for banks. Sharma (2009) states that the bank credit and bank deposits are
very closely related with each other that they represent, roughly speaking, two sides
of the same coin, and the balance sheets of banks. The three major deposits that banks
deals with encompass fixed deposit, saving deposit, current deposit.
Unlike the primitive days, banking business is experiencing a
spectacular growth in the modern business world standing as a
strong pillar in managing funds in a best possible way.

The swift development in the Information Communications and

Technology (ICT) has transformed the operation of banks. The
adoption of liberalization policy in mid 1980s opened the door for
foreign joint ventures to enter into banking business of Nepal. Nabil
bank is the first foreign joint venture bank established in 1984 AD.
Due to this policy, the number of banks and financial institutions
increased, giving rise to intense competition in the market. So, the
bank’s profitability and competitiveness depends on how best they
can mobilize the resources in a most efficient way. Elser (1999)
defined “Deposit mobilization as the process of encouraging
customers to deposit cash with the bank or luring new clients to
come and open accounts. From an institutional perspective, the
primary motive for mobilizing saving lies in lower cost of capital
compared to other sources of funds.”

Generating funds from different sources to strengthen liquidity

position and their effective utilization is the matter of concern for all
banks to remain profitable and enhance economic growth. Sound
investment policy is utmost necessity for long term sustainability.
So, the significance of deposit mobilization is increasing to remain
competitive in the dynamic business era. Deposit mobilization is an
integral function of a banking business. The efficiency and success
of banks greatly lies on deposit mobilization. It plays an important
role in providing satisfactory service to different sectors of the
economy. It is an important measure to prevent the potential risks
and uncertainties that might arise in future.

1.1 Profile, Event and Activities

Siddhartha Bank Limited

Siddhartha Bank Limited established in the year 2002, Siddhartha Bank Limited (SBL) is
recognized as one of the most efficient and professional banks in Nepal. A core philosophy
of the bank lies in nurturing relationships with customers and clients.

To ensure convenient access to services, SBL integrates digital banking in most

operations. Using online banking or Siddhartha Bank Smart App, SBL services can be
accessed by customers from anywhere in the world. The technology used is continuously
improved for enhanced customer experience. Earning confidence of its customers through
these facilities and prompt services, SBL is one of the most trusted commercial banks in
Nepal.

SBL follows all rules, processes and laws, ensuring due diligence in its operations, as
directed by the governing body.

In addition to benefiting its clients, customers and stakeholders, SBL contributes to

developing Nepal. As a responsible corporate, SBL supports innumerable CSR activities
throughout the country.

1.2 Statement of the problems

A problem statement is a clear concise description of the issues that need to be

addressed by problem solver or researcher. The main focus of this study will be to
deal with following problems.
 What is the relationship between deposit and total investment ?
 What is the relationship between deposit and loans ?
 What are the trend of fund mobilization in the productive sectors of the
economy ?
1.3 Objectives of the study

Objective of the study is one of the important element for conducting any research
because it helps in determining the possibility of conducting the study. Following will
be the major objectives of study.
 To identify the relationship between deposit and total investments.
 To identify the relationship between deposit and loans.
  To find the trend of fund mobilization in the productive sectors of the
economy.
1.4 Significance of the study

This study has significance to the researcher, organization and stakeholder on the
following basis:
 This study is important for the researcher to fulfill the academic requirement
of bachelor degree.
 To help the researcher to find out the position of risk and return of Siddhartha
Bank Limited.

1.5 Literature Review

Literature review is combination of two words literature and review. Past knowledge
which may published or unpublished related with research issue is known as
literature. Similarly, view again and again is known as review. Literature review
means study of previous research Works and books with the purpose of knowing the
details issue and find out appropriate methodology.

1.6 Research Methodology

Research methodology in the description of the procedures follows while collecting

the necessary data and information needed for the research work is refers how the data
is collected and which source the researcher has used for getting the data.

Research Methodology covers the data analysis tools as well. Research Methodology
facilitates the reliability and validity of research work. It includes:

1.6.1 Research Design:

To achieve the objective of this study, descriptive and analytical research design will
be used. Some financial and statistical tools will be applied to examine facts.

1.6.2 Population and Sample:

There are 20 commercial banks listed in Nepal, which are regarded as a population of
the study. It is difficult to cover all the Banks at a time. Thus, only one bank ,
Siddhartha Bank Limited, is taken as sample.
1.6.3 Method of Data collection:
This study will conducted on the secondary data. Similarly, various data and
information will be collected from the economic journals, periodicals, bulletins,
magazines and others published and unpublished reports.

1.6.4 Method of Data Analysis:

The financial tools like, current ratio, quick ratio, cash ratio, profitability ratio, etc.
and statistical tools like, arithmetic mean, standard deviation, correlation etc. will be
used.

1.7 Limitation of the study

This study is simply conducted for the partial fulfillment of the requirement for the
degree of the bachelor in business studies (BBS). And only the secondary data is used
and analyzed which could not disclose the actual result. And being the limitation of
the study is listed below:

 Mainly financial tools and statistical tools are employed for analyzing the
deposit mobilization on the profitability of Siddhartha Bank Limited.
 Due to the unavailability and difficulties to collect primary data, only the
secondary will be use.
 Data contains mostly of the annuals reports of Siddhartha Bank limited
through fiscal Year of 2077/78 to 2081/82.

1.8 Report Structure

Chapter-1 Introduction
Introduction and background of the study, also statement of problem, importance,
limitation, literature review and research methods etc. will be shown.
Chapter-2 Result and finding
This chapter will show the result with the help of using ratio and their trend analysis
and finding of the project work.
Chapter-3 Summary and conclusion.
This chapter will mention the summary and conclusion of the study.